Life Cycle Management

The investor cannot avoid addressing the life cycle issue of his properties. Life cycle management covers the following areas:

  • Life cycle phases
    • Idea – planning – building preparation
    • Commercialisation
    • Use / operation – vacancy rate – maintenance (reconditioning, repair, renovation)
    • Change / adaptation / conversion / extension or replacement newbuild
  • Life cycle costs (Life Cycle Costs [LCC] / Whole Life Costs [WLC])
    • = Indicator to establish the long-term efficiency of property investment costs
    • Indicators used for
      • purchase decisions
      • maintenance and renovation
    • combining initial and subsequent costs
  • Calculation of life cycle costs
    • There are no rules for calculating life cycle costs
    • Inclusion of outlay to eliminate the maintenance backlog (also refurbishment backlog) and renovation > construction costs affect future cash flows
      • Reduction of gross rent
      • Reduction of net value
      • Reduction of impact on future cash flows
    • Ratio of probable holding period to property investment for eliminating the maintenance backlog and renovation

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